A deal between Democrats and Republicans in the Senate on the upcoming tax hikes apparently collapsed last night after one Republican withheld unanimous consent to proceed. As a result, Democrats will hold two votes tomorrow on extending the current tax rates for middle-class workers, with one including workers making under $1 million per year. The votes won’t survive a filibuster, but Democrats want to use the votes to paint the GOP as the party of the rich. However, that strategy makes a lot less sense after the jobless report this morning:
Senate Majority Leader Harry Reid (D-Nev.) plans to schedule two votes on Saturday on Democratic plans to end Bush-era tax breaks for the nation’s highest income earners.
One plan sponsored by Senate Finance Committee Chairman Max Baucus (D-Mont.) would extend current tax rates only for families that earn less than $250,000. The second plan offered by Sen. Chuck Schumer (D-N.Y.) would extend tax rates only for families that earn less than $1 million.
The Senate will hold cloture votes on both of those measures Saturday to end Republican filibusters blocking them from floor consideration.
“Our priorities are very, very simple and direct,” Reid told reporters Thursday night. “One, we want to make sure the American people know we believe that tax cuts should be extended for people making less than $250,000 a year.
“And just to make sure the American people understand that we do not support giving tax cuts for millionaires and billionaires, we’re going to have a second vote on that,” Reid added.
This has to be the most unintentionally hilarious comment of the day:
Sen. Mark Udall (D-Colo.) said Democrats were getting tired of talking about taxes and itching to act.
Er, really? Democrats have had two years to act on these expiring tax rates. They had an opportunity to address the issue before the election, and adjourned instead, even though a clear majority in both chambers of Congress supported an across-the-board extension of the current tax rates. The Democrats avoided acting out of fear of the midterm vote, and still wound up getting punished.
Last night, this defiant stand to protect a punitive tax hike on higher-income households may have looked courageous in a populist manner. Now it just looks foolish in every fiscal sense. The economy has gotten strangled, with unemployment jumping up to 9.8% and job creation shrinking again. The massive government stimulus has done nothing to create momentum for growth, nor to convince investors to plunge into the murky waters. Hiking taxes on their income will deter rather than encourage the kind of massive investment needed to create jobs and move economy into real growth.
It takes wealth and confidence put together in action to create economic growth. Instead, Democrats want to punish income growth and sap confidence in the future, while stalling to build themselves the kind of populist credibility that led to a historic defeat in the midterms, all in relation to an issue they could have resolved months or years ago when they had the political momentum to dictate outcomes. It’s a demonstration of impotence and pique, not a principled stand at all, especially since the outlines of the deal they’re cutting are already well known:
The negotiators have put together the outlines of a deal that would extend all of the Bush tax cuts for two years and extend federal unemployment benefits for a year, according to congressional sources. Democrats are also pushing for an extension of the Make Work Pay and college-tuition tax credits that were part of the 2009 economic stimulus package.
But Republicans have balked at the cost of the Make Work Pay and the college-tuition tax credits, which would cost an estimated $62 billion and $8 billion to extend for one year, according to GOP sources.
Democrats want a sequel to Porkulus? No wonder the deal fell apart. Perhaps it will be better to punt on this after all and wait for the GOP to take over the House to resolve the tax issue. It will be a lot less expensive, at the very least.